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Righter: Road to reclaiming fiscal sanity will be a multi-year process, and ‘Step Two’ is upon us

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Wednesday, January 17, 2018Tagged with

After two years of gridlock, the Illinois General Assembly passed into law a full-year budget last year that raised taxes and cut spending by nearly $3 billion. That includes $800 million less than what Gov. Rauner originally suggested we spend. Despite claims made to the contrary as a preamble to this year’s elections, the budget that passed was in balance; whether it remains so throughout the course of the fiscal year will depend upon the same factors that affect every budget – namely, whether expense and revenue projections turn out to be accurate.

“Step One” in reversing the 15 year run of dramatically irresponsible spending and borrowing policies brought upon Illinois courtesy of the Madigan-Blagojevich-Quinn team was enacting a budget that was both in balance and made a down payment on the billions in unpaid bills accumulated over the years. The budget package approved last July did both.

But that was simply the first step. The road to reclaiming fiscal sanity will be a multi-year process, and “Step Two” is upon us this year.

Early projections show the next fiscal year’s budget to be approximately $2 billion out of balance. Why? The culprit is Illinois’ underperforming economy.

Technically, Illinois is in a period of economic growth. But the growth rate overall is very weak; projections for the coming fiscal year are for a one-percent growth rate. During a similar period in Illinois 20 years ago, this figure was typically three-percent or more, which in terms of both tax revenues and jobs, is a stunning difference.

So what has changed? Well a number of factors – but one of the most significant is the failure of governors and governing majorities in Springfield to update our economic policies. The states that surround Illinois have done so, and despite being in the same Midwest region, their economic growth rates are higher. The same holds true for many other states, particularly those in the south. But Illinois’ political ruling class has forfeited meaningful job growth in exchange for protecting the status quo.

“Step Two” is twofold. First, more cuts to the budget in order to achieve balance. There will not be another tax increase, so in order to avoid burdening the next generation with billions more in deficit spending that generates even more in unpaid bills, any projected deficit must be dealt with through spending reductions alone. That is a reality with which almost every legislative Democrat will struggle, and even many Republicans, despite rhetoric to the contrary.

Second, the economic reforms Republicans have been seeking for years. The formula is simple: the more job growth-friendly Illinois is, the more tax revenue will be generated, making it easier to balance the budget. It’s a proven economic formula that has worked nationally and is working today in states across America.

If we don’t achieve these job-growth reforms, Illinois will continue to see rapid population loss, another factor killing Illinois’ revenue stream. The out-migration has already caused Illinois to drop from fifth-most populated state to sixth. It’s no wonder the state’s economy and hundreds of local economies are suffering because so many people are moving out and no one else is moving in. We need to act now to begin to reverse the trend.

Every politician in Springfield likes to talk about how important our children and the next generation are. This year will be another chance to prove there’s something to that rhetoric, by balancing the budget and paying for that which we choose to spend.